How Sweden built one of Europe’s hottest startup ecosystems

Sweden is perhaps one of the world’s hottest tech hubs right now.

It has long been home to Spotify and Klarna, but this latest wave of companies — from legal AI startup Legora to vibe-coding tool company Lovable — has left everyone wondering what’s going on in one of the world’s happiest countries.

Sophia Bendz, a general partner at Cherry Ventures, stopped by Equity to break down the latest in Stockholm’s startup ecosystem. Her answer for why the country has produced so many buzzy startups: Being a founder is actually cool. When she worked at Spotify years ago, the cool thing was to become a banker or go into consulting.

“Now, I think a lot of people optimize for creating stuff and optimizing for both sort of freedom and probably wealth.” This year, the startup ecosystem has raised $2.8 billion in funding, according to Dealroom, and is projected to hit at least $5 billion. Last year, the ecosystem raised $3.2 billion.

Nothing has quite matched the $8.5 billion raised in 2021 — a reflection of the hot venture market that later cooled and is now, per the data, starting to heat back up again. Other big emerging names from the ecosystem include Neko Health and autonomous freight company Einride.

Bendz said that the latest wave of startups in Stockholm is benefiting from the first generation of entrepreneurs, who are providing resources and mentorship to the latest generation — or, in some cases, becoming repeat founders themselves (Spotify founder Daniel Ek, for instance, is also the founder of Neko Health).

“I think we also see a lot of people now kind of leaving Lovable because they also see these opportunities for companies that can be built with that technology,” she said about how this generation could inspire the next. “People that have worked at Lovable and Legora seem to be very entrepreneurial-driven and keen to start their own companies.” Unsurprisingly, American investors have taken note.

Bendz said more and more American investors have been flying in to meet with founders and hand out term sheets. “It’s just a testament to that we have a lot of great building companies here,” she said. “It’s a sign that we’re doing something right.”